Mian Zahid Hussain Warns Against Tax-Heavy Budget, Calls for Growth-Led Economic Strategy

Prominent business leader Mian Zahid Hussain has expressed serious concerns over reports surrounding the Federal Budget 2026-27, urging the government to prioritise economic growth, industrial expansion and exports instead of focusing primarily on revenue collection.

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Hussain, who serves as President of the Pakistan Businessmen and Intellectuals Forum and Chairman of the Policy Advisory Board of FPCCI, said Pakistan must move beyond a tax-driven economic model and adopt policies that support sustainable growth.

Revenue Targets Could Increase Pressure on Industry

He warned that proposed measures linked to IMF conditions could place an additional burden on businesses and existing taxpayers.

According to Hussain, the reported federal revenue target of Rs17.145 trillion, a possible increase in the sales tax rate and higher tax collection goals for the Federal Board of Revenue (FBR) indicate that industries may once again shoulder the bulk of the fiscal burden.

He argued that excessive taxation could further weaken business activity and slow economic momentum.

Low Growth Targets Remain a Concern

Hussain noted that while inflation has fallen to single digits, economic growth remains sluggish.

He said the government’s projected GDP growth target of 3.5 to 4.2 percent for the next fiscal year suggests that Pakistan is still far from achieving stronger growth rates of five to six percent.

Furthermore, he stressed that sustainable economic expansion cannot be achieved without reducing import duties on raw materials, lowering energy costs and easing high borrowing rates.

Rising Petroleum Levy Could Increase Costs

The business leader also criticised plans to increase the petroleum levy under IMF-backed reforms.

He warned that higher fuel charges would increase inflation and significantly raise the cost of doing business.

As a result, industries could face additional financial pressure at a time when competitiveness is already under strain.

According to Hussain, Pakistan urgently needs policies that encourage productivity and investment rather than measures focused solely on boosting tax revenues.

Link Development Spending to Job Creation

Hussain urged the government to align development spending with productive sectors of the economy.

He suggested that the proposed Rs1.1 trillion Public Sector Development Programme (PSDP) should not be limited to infrastructure projects alone.

Instead, he called for incentives for the information technology, agriculture and manufacturing sectors to create jobs and stimulate economic activity.

Broaden Tax Base Instead of Burdening Industry

The business leader said meaningful tax reform requires expanding the tax net rather than imposing additional burdens on the formal sector.

He recommended bringing currently under-taxed sectors, including agriculture and retail, into the tax system.

At the same time, he called for reducing the tax burden on manufacturers to strengthen Pakistan’s export competitiveness.

Without such reforms, he warned, Pakistani products could struggle to compete with regional rivals in international markets.

Call for Business-Friendly Tax Policies

Hussain also argued that enforcement-driven approaches have failed to improve tax compliance.

He said tactics such as raids, account restrictions, blacklisting and harassment are outdated and ineffective.

Instead, he urged policymakers to simplify tax laws and create a more business-friendly environment.

Furthermore, he advocated for the full digitalisation of the economy to improve transparency, reduce tax evasion and increase revenue collection.

Digital Economy Key to Future Growth

According to Hussain, a modern digital tax system could significantly improve Pakistan’s tax-to-GDP ratio.

He said the current ratio of around 10 percent could potentially rise to 15 percent through better compliance and technology-driven reforms.

In conclusion, Hussain stressed that Pakistan’s long-term economic success depends on encouraging investment, supporting industry and creating an environment where businesses can grow, export and generate employment.